Dependent Care Accounts:
Want to reduce your dependent care tax burden?
A Dependent Care Account (DCA) lets you reimburse yourself with pre-tax money for expenses associated with dependent care for children under age 13 or an adult dependent incapable of self-care. Since your contribution is taken from your paycheck before tax, this reduces your overall taxable income.
You may set aside up to $5,000 pre-tax per calendar year or $2,500 if you are married and file a separate tax return. Due to federal regulations, you cannot be reimbursed until after you’ve received service.
DCA Reimbursement Process
January 1
Pay dependent care provider
January 1-30
Care is provided
January 30
Contribution is withheld from paycheck
(Varies based on scheduled deduction dates.)
February 1
Submit reimbursement request for January's care
(Processed within 3 to 5 business days and pending until the contributions are received from the employer.)
February 5
Contribution received from employer and posted to participant account
February 6
Reimbursement is issued via direct deposit or paper check
Disclaimer: This is for illustrative purposes only. Dates and terms may vary by employer.
Tip! Submit Your Full Expense Amount
Submit the entire amount of your incurred dependent care charges, even if it exceeds your monthly contribution amount. This allows you to build up your incurred expenses, with amounts ready for reimbursement as soon as the payroll contribution is received from your employer.
Connect with your American Fidelity account manager to see if a DCA is the right choice for you!